Board Not Helping Solve Jooste Riddle
Updated: Apr 29, 2019
'I've put in so many enigmas and puzzles that it will keep the professors busy for centuries arguing over what I meant, and that's the only way of insuring one's immortality."
From a distance, except for the accidental alliteration in their surnames, there is little to connect James Joyce and Markus Jooste.
Joyce — the celebrated Irish writer — immortalised himself through the publication of Ulysses in 1922. The book narrates the events of a single day in June 1904 in Dublin. However, so complex and intertwining are its narratives, and so convoluted is its language, that it occupies a rare space in literature as one of those books people prefer to hear about rather than actually read. Joyce himself took pride in this, and, when asked to explain his work, simply uttered the words above.
Jooste's Ulysses moment took place in the small town of Stellenbosch in December 2017. With just one simple message opaquely referring to contrition over some "accounting irregularities", he set in motion a series of events that have ended up with the publication of the business version of Ulysses — a complicated, confusing and convoluted summary report by PwC.
Since 2017, the board of Steinhoff and an army of investigators from PwC have been attempting to unpack the essence of these "accounting irregularities" at Steinhoff. Their pursuit of this enigma has involved multiple jurisdictions, numerous interviews and inspections of thousands of documents.
The net result — a 3,000-page report supplemented by more than 4,000 annexures — would be enough to make Joyce himself proud.
The problem, of course, is that Joyce's work was fictional and understood as such. Jooste's work, on the other hand, was supposed to be a truthful reflection of the accounts of the business. The summary forensic report indicates that very little of the information provided to stakeholders can be relied upon. As a consequence, the financial statements for the most recent reporting periods will have to be restated. The deadlines for the submission of the report have shifted multiple times simply because the more work the investigators did, the more complex and opaque the picture became.
Last Friday, as the summary of the report made its way into the public domain, there was an important disclaimer implying that the full report would not be made available to the public and Steinhoff's own stakeholders due to issues relating to potential and future litigation.
This was an odd stance by Steinhoff, whose boardended up in this mess precisely because accountability and integrity took a back seat in the business. Though the summary report indicates none of the nonexecutive directors knew of the fraud, it also bizarrely takes the morally dubious position of refusing to name the actual perpetrators. Rather than named as a grand fraudster who still fails to account for his actions, Jooste was referred to as a "senior management executive".
This is a problem for the forensic investigators and the board of Steinhoff. PwC undertook the work for the benefit of the shareholders of Steinhoff, not its directors. If they are ready to publish views they can defend, there shouldn't be the strong need to insulate themselves from accountability through legal disclaimers.
Lacking even the courage to name Jooste implies their concern that legal culpability trumps public interest in the work they did. Similarly, the directors did not commission the report for themselves but for the shareholders who employ them. To then take the view that the report is confidential and privileged betrays a limited understanding of the duties of directors as the oversight agents employed by shareholders.
The fact that the oversight job was shown to have been conducted so poorly in the first place led many of us to believe that this cohort of Steinhoff directors had learnt their lesson. Regrettably, they have not.
In refusing to divulge the names of the directors implicated, the current chair and CEO of Steinhoff quoted confidentiality, European laws and even potentially jeopardising future litigation as reasons for the bizarre decision. It eventually took a resolution by three parliamentary committees to convince the company to divulge the eight names implicated in the €6.5bn (about R106bn) fraud.
The nature of Jooste's alleged fraud has become an enigma that will still take time to interpret and understand. His refusal to participate in the process means that the professors and investigators will take years to understand how it all happened.
The Steinhoff saga will certainly ensure that Jooste's infamy guarantees his immortality — for all the wrong reasons.
This article first appeared in the Business Times section of The Sunday Times on 24 March 2019